While it’s important to get prospects in and convert them, it’s more important to the long-term success of your venture to direct the bulk of marketing efforts in the area of client retention. Conventional business and marketing methods focus on increasing profits by increasing the number of new business contacts. While casting a wide net in search of market share may cause an initial spike in sales volume, without a viable strategy to develop customer loyalty and return business, sales and profits fall flat and diminish over time. Sustainability in the marketplace is a greater indication of the longevity and financial stability of an organization.
Studies indicate that up to 80 percent of a company’s future profits are anchored in 20 percent of their existing client base. So with these numbers in mind, why do some many businesses dedicate the majority of their efforts and marketing budget to customer acquisition, as opposed to retention? Part of the answer is immediacy. It’s easier to see the tangible results of an initial marketing campaign than it is to gauge the future impact of a long-term customer retention commitment. However, businesses who overlook this aspect are being short-sighted. As little as a 5 percent increase in customer retention can increase your company’s profits, and your ROI, by up to 125 percent, and its lifetime value by 95 percent. The reason is simple: it’s easier to preach to the converted. By building brand and company loyalty, existing customers require less effort and money to sell than consumers to whom your product or service is an unknown quantity.
By Servicesource team